Scott: Eventual, Reluctant Tax Ally?

Concession Talks Collapse Between Weicker, Unions

If Repeal Effort Fails, Scott May Support Reforming State Income Tax

The legislative effort to amend the income tax to make it more palatable to the middle class may gain a powerful and unexpected ally if a drive for repeal falls short.

Thomas Scott, the leader of the anti-income-tax movement that staged the biggest protest in Connecticut history last weekend, said Friday he would support amendments to the tax if it became clear repeal is impossible.

He stressed, however, that this would be a temporary concession, designed strictly to give some relief to taxpayers until November 1992, when they can vote out of office the legislators who passed the income tax.

In another development Friday, negotiations collapsed between Gov. Lowell P. Weicker Jr. and state employee labor unions on contract concessions to balance the state budget.

The impasse means Weicker will continue with plans to lay off 3,750 workers and force almost 12,000 more to take unpaid days off to save $86 million over the next nine months.

About 300 employees have lost their jobs already and hundreds more will be gone by the end of next week if the impasse is not broken.

The talks between Weicker and the unions have hit snags before, but Friday's seemed more ominous.

"There was ongoing, informal communication the last time the negotiations stalled," said a Weicker aide. "Not this time." Meanwhile, in a joint appearance on a Connecticut Public Television interview program, Scott surprised Rep. Jonathan W. Pelto, D-Mansfield, a leading income-tax supporter, by saying he would support amending the income tax if the repeal effort fails.

"Anything we can do to lessen the burden through the 1992 election," Scott said, "and then we'll repeal it." Pelto and others are leading what they call a "repair" movement to counter the repeal drive mounted by Scott, chairman of the Connecticut Taxpayers Committee, and anti-income-tax legislators.

The argument they make is that repeal appears certain to fail

because it would take a two-thirds majority of both houses to override a Weicker veto.

Therefore, they say, the people who are criticizing the income tax for placing too big a burden on the middle class can demonstrate a real concern for those taxpayers by supporting some amendments to the income tax.

Although the proposals are still being worked out, they are expected to include giving exemptions to couples who earn more than $71,001 a year -- the limit in the current law.

To compensate for the revenue loss, the 4.5 percent rate for the wealthiest taxpayers may be increased. Another possibility is that capital gains, dividends and interest income would be taxed at higher rates.

The strategy of the repair movement apparently is to farm the repeal movement's most fertile ground -- middle-class outrage.

In essence, it challenges repeal advocates to prove they care about the middle class by supporting amendments that can pass instead of crying for a veto override that repeal opponents say cannot pass.

If the repeal advocates decline, they can be accused of not being sincere about helping the middle class.

That seemed to be what Pelto was expecting when, midway through the taping of CPTV's "On the Record," he pressed Scott to say whether he would support "repair." At first, Scott said no. "We do not support repair. It's like, `Boy do I have a deal for you. Let's repair it this year and then next year we're going to stick you with a higher rate.' " Pelto interrupted, raising his eyebrows as if he were amazed at Scott's answer. "Are you saying you would not help us give dual-income earners a break?" he asked, referring to one group of taxpayers especially hard hit by the income tax.

Scott shifted gears, saying that if -- only if -- the repeal effort died, he would resign himself to not being able to win that battle until the pro-income-tax legislators are turned out of office.

"If we don't get repeal now, it ought to be repaired," he said.

Pelto said he was gratified to hear that, adding that Scott's help could be crucial to getting the legislative votes for the repairs.

Scott then reaffirmed his position, but said, "Keep in mind what the deal is here." Turning to face Pelto, Scott said, "You don't repeal, we're [still] going to get it repealed, because we're going to repeal people like you, who voted for the income tax, in the '92 election." Short of the income tax being repealed, the biggest threat to the survival of the 1991-92 state budget is the inability of Weicker and the unions to resurrect their April agreement that would have saved the state $354 million.

The agreement called for a wage freeze, a reduction in pension contributions and other concessions to take effect July 1, but because the legislature and governor had not agreed on a budget by that time, the deal lapsed.

As a result, about 15,000 of 39,000 workers paid out of the general and transportation funds received raises that were to have been deferred for 11 1/2 months.